Venture capital in karnataka

International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online), Volume 3, Issue 3, September- December (2012)

246

VENTURE CAPITAL IN KARNATAKA

Dr. N. Nagaraja1 and Srinivas K.T2 1Dr. N. Nagaraja. Associate Professor, Department of Commerce, Manasagangothri, University of Mysore,

Mysore 2Srinivas K.T. Associate Professor, Community Institute of Management Studies , 2nd Block Jayanagar

Bangalore-11

ABSTRACT

India is the fastest-growing Venture Capital market in Asia and fastest developing nations in the new millennium. It is one of the hotspots for investments with reaping rich benefits. In that, Karnataka happens to be the state where it has been observed that, before the information technology (IT) revolution since 1995 onwards; there were negligible diffusion of venture capital funding, predominantly having an agro-based economy, Karnataka has shifted their focus from Agriculture to IT and IT enabled services as it started enjoying the benefits during the second-generation reforms starting from 1995 onwards. From the review of different literature and statistical data, it can be inferred that with higher human capital and social capital, Karnataka is exploring the venture capital market extensively. (C.K .Nath) In this context, we made an attempt to study the growth and investment of venture capital companies and their funds. Key words: Venture Capital, Seed Corn Capital, etc. INTRODUCTION Karnataka is one of the high economic growth state and is considered as a pioneer in the field of industrialization in India. Karnataka is best known for its software industry and now biotechnology and the state has recorded the highest growth rates in terms of GDP and per capita GDP in the last decade compared to other states. The state has been in the forefront of industrial growth of our country since independence. In the era of economic liberalization since 1991, the state has been spearheading the growth of Indian industry, particularly in terms of high-technology industries such as Electrical and Electronics industries, Information &Communication Technology (ICT) industries, Biotechnology industries and more recently in terms of Nanotechnology industries. However, the industrial structure of Karnataka presents a blend of modern high-tech capital goods and knowledge intensive industries on the one hand and traditional consumer goods industries on the other.

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The growth of venture capital in some of advance states of India where VCF (Venture Capital Fund) has taken place in large numbers. Maharashtra is leading in terms of venture capital movement followed by Gujarat, Tamilnadu, and Karnataka. Bangalore has rapidly made the transition to the new economy in Information Technology (IT). Bangalore plays a prominent role in international electronics, telecommunications and information technology contributing almost 40% of India's production in high technology industrial sectors. Bangalore is home of the corporate giants in IT and ITES (Information Technology enabled Services) like Infosys, Wipro, IBM, Compaq, HTMT, Siemens. E&Y, etc. Karnataka's IT industry is mostly concentrated in and around Bangalore; hence popularly nick named as “Silicon City”. Karnataka's software industry has shown a steady and high growth rate in comparison with other states in the country. The several international-standard research institutes, the entrepreneurial spirit, pro-active policies by the Central and State Governments, the cultural and economic milieu of a high-tech city are all ingredients for the success Bangalore’s IT and ITES industry. VENTURE CAPITAL

Venture Capital refers to the commitment of capital as shareholding, for the formulation and setting up of small firms specializing in new ideas or new technologies. It is not merely an injection of funds into a new firm, it is a simultaneous input of skill needed to setup the firm, design its marketing strategy and organize and manage it. It is an association with successive stages of firm’s development with distinctive types of financing appropriate to each stage of development.

Venture capital is the support by investors of entrepreneurial talents with finance and business skills to exploit market opportunities and thus obtain capital gains. Venture Capital commonly describes not only the provisions of start-up finance or ‘seed corn’ capital but also development of capital for later stages of business. A long-term commitment of funds is involved in the form of equity investments, with the aim of venture capital gains rather than income, and active involvement in the management of customer’s business.

Venture capital financing means providing a proper mix of medium and long-term investments in high-risk industrial projects with high reward possibilities. It may be at any stage of implementation of the project or its production cycle viz., to start-up an economic activity or an industrial or commercial project or to improve a process or a product in an enterprise associated with both risk and reward. Medium-term refers to a period ranging between 3-5 years and ‘long-term’ covers a period of 5-15 years. International Finance Corporation. Washington, (IFC) defines Venture Capital as equity or equity-featured capital seeking investment in new ideas, new companies, new products, new process or new services that offer the potential of high returns on investment. It may also include investment in turnaround situations. AIM OF THE PAPER

This paper is designed to provide a comprehensive picture of venture capital industry in Karnataka. Statement of the Problem Karnataka is shifting its focus from Agriculture to IT; in this context study recognizes to know the Growth of venture capital investments in Karnataka.


248

SCOPE OF THE STUDY The present study is confined to venture capital firms located in Karnataka under the

registration of SEBI and functioning in Karnataka. At present as on May 30, 2012, total 13 venture capital firms and 21 of their funds located in Karnataka. OBJECTIVES OF THE STUDY

1. To study the Growth of venture capital funds in Karnataka 2. To study the total investment of venture capital firms in Karnataka 3. To know the individual investment of venture capital firms in Karnataka 4. To know the sector which gains more importance in investments of VC in Karnataka 5. To study which stage venture capitalists are financing more in Karnataka 6. To offer suggestions based on the findings of the study.

Data collection The data collected for a period of 13 years between 1998 to Nov 2012, from all the venture capital firms Registered under SEBI, functioning in Karnataka. Sources of Data Primary data Collected through questionnaire, interview method and Secondary data from venture intelligence, company website, company’s magazines, and other relevant documents. Sampling In this study data is collected from the entire population i.e. VC firms which are functioning in Karnataka under SEBI guidelines. And Red wood Capital, Spice Capital Fund, High Street Venture Capital funds transactions not found . ANALYSIS PART

Growth of Venture Capital Funds in Karnataka as on May 31st 2012

Sl.No. Name of venture capital Fund Year of Registration 1 KITVEN Fund 1998

2 Canbank Venture Capital Fund 1998

3 India Advantage Fund I 2002

4 India Advantage Fund 2003

5 Spice Capital Fund 2004

6 India Advantage Fund III 2005

7 India Advantage Fund IV 2005

8 India Advantage Fund V 2005

9 Foot Print Venture Capital Fund 2007

10 India Advantage Fund S31 2008

11 Forum Synergies India Trust 2008

12 High Street Venture Capital Trust 2008

13 KITVEN Fund II 2008

14 ACA Private Equity trust 2008

15 Zephyr Peacock India II Trust 2009

16 PI Opportunities Fund I 2009

17 PI Opportunities Fund II 2009

18 India Value Fund IV 2009

19 India Advantage Fund RES2 2010

20 Red Wood capital Trust 2011

21 Karnataka Venture Capital Fund 2011

International Journal of Management (IJM), ISSN 0976 6510(Online), Volume 3, Issue 3, September

Analysis The Genesis of Venture Capital in Karnataka started in 1998, with only two venturefunds namely KITVEN and CanbVenture Capital didn’t see any rise in Karnataka. In 2002, 2003 and in 2004, there was only a marginal increase in their number. Due to tremendous growth in IT and Karnataka, especially in Bangalore, three venture capital firms started its operations in 2005, totaling the number to 8. After 2005, the Venture Capital sector, started gaining momentum and reached its peak in 2008 and 2009. By the end oventure capital firms, registered as per SEBI guidelines and functioning in Karnataka. Global recession after 2009, has affected the growth of venture capital. As a result, it could be noticed that in 2010, there was only one venture capital firm and in 2011only two venture capital funds started their operations in Karnataka. 2012, didn’t witness any growth in venture capital.

Inference It is clearly evident from the above graph that, venture Capital made its beginning in Karnataka only after 1998. Another three years didn’t see any rise. But Growth of IT and ITES sector contributed tremendously fgrowth of Venture Capital in Karnataka. As it is depicted in the above graph, in 2002, 2003 and 2004 there were one venture capital fund started respectively. However, after 2005, the growth of Venture Capital accelerated and in 2008 alone five comoperations. Similarly in 2009, 2010 and in 2011, four, two and two venture capital companies were started respectively.

2

0 0 0

1

0

1

2

3

4

5

6

1998 1999 2000 2001 2002

Growth of Venture Capital Funds in Karnataka

International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 3, September- December (2012)

249

enesis of Venture Capital in Karnataka started in 1998, with only two venturefunds namely KITVEN and Canbank Venture Capital fund. However another Venture Capital didn’t see any rise in Karnataka. In 2002, 2003 and in 2004, there was only a marginal increase in their number. Due to tremendous growth in IT and ITES sectors in Karnataka, especially in Bangalore, three venture capital firms started its operations in 2005, totaling the number to 8. After 2005, the Venture Capital sector, started gaining momentum and reached its peak in 2008 and 2009. By the end of December 2009, there were totally 18 venture capital firms, registered as per SEBI guidelines and functioning in Karnataka.

n after 2009, has affected the growth of venture capital. As a result, it could as only one venture capital firm and in 2011only two venture

capital funds started their operations in Karnataka. 2012, didn’t witness any growth in

It is clearly evident from the above graph that, venture Capital made its beginning in Karnataka only after 1998. Another three years i.e., from 1998 to 2001, Venture capital didn’t see any rise. But Growth of IT and ITES sector contributed tremendously fgrowth of Venture Capital in Karnataka. As it is depicted in the above graph, in 2002, 2003

2004 there were one venture capital fund started respectively. However, after 2005, the growth of Venture Capital accelerated and in 2008 alone five companies started their

Similarly in 2009, 2010 and in 2011, four, two and two venture capital companies

1 1

3

0

1

5

4

2

2002 2003 2004 2005 2006 2007 2008 2009 2010

Growth of Venture Capital Funds in Karnataka

Venture Capital Funds

6502(Print), ISSN 0976 –

enesis of Venture Capital in Karnataka started in 1998, with only two venture capital ank Venture Capital fund. However another three years

Venture Capital didn’t see any rise in Karnataka. In 2002, 2003 and in 2004, there was only a ITES sectors in

Karnataka, especially in Bangalore, three venture capital firms started its operations in 2005, totaling the number to 8. After 2005, the Venture Capital sector, started gaining momentum

f December 2009, there were totally 18 venture capital firms, registered as per SEBI guidelines and functioning in Karnataka.

n after 2009, has affected the growth of venture capital. As a result, it could as only one venture capital firm and in 2011only two venture

capital funds started their operations in Karnataka. 2012, didn’t witness any growth in

It is clearly evident from the above graph that, venture Capital made its beginning in , from 1998 to 2001, Venture capital

didn’t see any rise. But Growth of IT and ITES sector contributed tremendously for the growth of Venture Capital in Karnataka. As it is depicted in the above graph, in 2002, 2003

2004 there were one venture capital fund started respectively. However, after 2005, the panies started their

Similarly in 2009, 2010 and in 2011, four, two and two venture capital companies

2

0

2011 2012


250

Investments of Venture Capital Firms in Karnataka as on 30th Nov 2012

Year /VC firm

kitven

UTI ICICI 2i

Capital PI opp.

India value fund

Ascent capital

Can bank

Footprint

Forum synergies

Kazein trust

Zephyr peacock

Total

1998 2.97 2.97

1999 0.1 5.76 5.86

2000 0.22 60.14 60.36

2001 1.27 4.3 12.48 4.15 23.34

2002 0.69 7.5 4 12.19

2003 11.35 81.29 8 103.62

2004 3 91.97 32.34 127.31

2005 43.77 202.62 57.85 304.24

2006 1.24 65.5 193.37 595.18 11 2.46 868.75

2007 176.3 513.3 3.78 12.27 4.34 17.32 727.31

2008 119.9 211.4 199 177.5 2.85 5 715.65

2009 0.52 0 69.33 69.85

2010 1 31 43 38.82 134 9.04 15 271.86

2011 1.1 37.44 105.83 20 43 2 1 7.15 12 229.52

2012 25 10 7 3 3.6 12 60.6

Total 5.45 462.25 1519.63 595.18 270.78 435.26 187 13.12 17.23 3 10.75 63.78 3583.43


Analysis The above table represents the total investments of venture capital firms in Karnataka from 1998 to 2012. Total investments made by these firms are 3583.43 US $ Million as on Nov 2012. In that, ICICI venture invested investment was made in 2006, and second the third highest investments. This clearly in financial institutions moving from the principles of ‘Safety’ towards, risk takers. will be given to financial viability of the project and its future capital gains and appreciations rather than Safety and immediate returns from the fund.

Inference The above diagram depicts the investment made during various years. As it is evident, during 1998, it was as low as 2.97 million US $ and it was maximum during 2006, amounting does not means, merely injecting funds into a new firm, it is a simultansuch as skill, needed to setup the firm, designing its marketing strategy, organizing and managing it. Total investments made by these Venture Capital firms was 3583.43 US $ Million, with in a span of 15 years. It is a clear indicatiideas, new companies, new products, new process or new services of high returns on investment, are encouraged more than time tested, well proven track record projects. Financial institutions also comethan ‘play safe’ strategy.

2.97 5.86

60.3623.34 12.19

0

100

200

300

400

500

600

700

800

900

1000

1998 1999 2000 2001 2002

Venture Capital Investment in Karnataka


251

the total investments of venture capital firms in Karnataka from 1998 to 2012. Total investments made by these firms are 3583.43 US $ Million as on Nov

ICICI venture invested maximum amount in Karnataka. Maximum in 2006, and second largest investments in 2007 and 2008 witnessed

. This clearly indicates that there is a growing tendency and shift, in financial institutions moving from the principles of ‘Safety’ towards, risk takers. will be given to financial viability of the project and its future capital gains and appreciations

ety and immediate returns from the fund.

The above diagram depicts the investment made by Venture Capital firms in Karnataka, during various years. As it is evident, during 1998, it was as low as 2.97 million US $ and it was maximum during 2006, amounting to 868.75 million US $. Venture Capital necessarily does not means, merely injecting funds into a new firm, it is a simultaneous supply of inputs such as skill, needed to setup the firm, designing its marketing strategy, organizing and

Total investments made by these Venture Capital firms was 3583.43 US $ Million, with in a span of 15 years. It is a clear indication that in this competitive world, new ideas, new companies, new products, new process or new services which offersof high returns on investment, are encouraged more than time tested, well proven track record

institutions also come forward to investment in such high risk projects,

12.19

103.62127.31

304.24

868.75

727.31715.65

69.85

271.86229.52

2002 2003 2004 2005 2006 2007 2008 2009 2010

Venture Capital Investment in Karnataka

Value in US $ Million

6502(Print), ISSN 0976 –

the total investments of venture capital firms in Karnataka from 1998 to 2012. Total investments made by these firms are 3583.43 US $ Million as on Nov

Maximum amount of 2008 witnessed

that there is a growing tendency and shift, in financial institutions moving from the principles of ‘Safety’ towards, risk takers. Priority will be given to financial viability of the project and its future capital gains and appreciations

firms in Karnataka, during various years. As it is evident, during 1998, it was as low as 2.97 million US $ and it

868.75 million US $. Venture Capital necessarily eous supply of inputs

such as skill, needed to setup the firm, designing its marketing strategy, organizing and Total investments made by these Venture Capital firms was 3583.43 US $

on that in this competitive world, new s the potential

of high returns on investment, are encouraged more than time tested, well proven track record forward to investment in such high risk projects,

229.52

60.6

2011 2012


INDIVIDUAL VENTURE CAPITAL FIRMS INVESTMENTS AS ON

Venture Capital Firm

Kitven

UTI

ICICI

2i Capital

PI opp.

India value fund

Ascent capital

Can bank

Footprint

Forum synergies

Kazein trust

Zephyr peacock

Total Analysis The above table shows the total amount of from 1998 to 30th November 2012. Totally 3,583.43 million US $ has been invested in Karnataka so far. ICICI heads the race, with a total investment of 1,519.63 million US $, whereas 2i Capital occupies the 2India Value fund occupies 3rd and 4could record a growth rate of 5.3 % in her GDP, which opens up wider horizons for Venture Capital.

5.45

462.25

1519.63

595.18

0

200

400

600

800

1000

1200

1400

1600

Venture Capital Firms Investments in Karnataka


252

INDIVIDUAL VENTURE CAPITAL FIRMS INVESTMENTS AS ON 30

Venture Capital Firm Amount of Investment (US $ Million)

5.45

462.25

1519.63

595.18

270.78

India value fund 435.26

Ascent capital 187

13.12

17.23

Forum synergies 3

10.75

Zephyr peacock 63.78

3583.43

The above table shows the total amount of finance, invested by various Venture Capital firms November 2012. Totally 3,583.43 million US $ has been invested in

Karnataka so far. ICICI heads the race, with a total investment of 1,519.63 million US $, he 2nd place with an investment of 595.18 million US $. UTI,

and 4th place respectively. Despite global recession, India could record a growth rate of 5.3 % in her GDP, which opens up wider horizons for Venture

595.18

270.78

435.26

187

13.12 17.23 3 10.75

Venture Capital Firms Investments in Karnataka

Investment in US $ Million

6502(Print), ISSN 0976 –

30thNov 2012

finance, invested by various Venture Capital firms November 2012. Totally 3,583.43 million US $ has been invested in

Karnataka so far. ICICI heads the race, with a total investment of 1,519.63 million US $, place with an investment of 595.18 million US $. UTI,

place respectively. Despite global recession, India could record a growth rate of 5.3 % in her GDP, which opens up wider horizons for Venture

10.7563.78


253

Inference This diagram shows the share of different Venture Capital companies during 1998 to 2012. While ICICI fund contributed largest towards Venture Capital, 2i Capital fund comes after that. UTI fund and India Value fund and PI Opportunities Fund occupy the later spots respectively. Totally 3,583.43 million US $ has been invested in Karnataka during 1998 to 2012. Global recession has adversely affected the Venture Capital investment in Karnataka. Never the less, this is an effect of trade cycle and after recession and depression, economy will surely recover and reaches prosperity. Hence recession stage is not permanent. Looking into the future prospects, Venture Capital has wider scope.

Sector wise investments of VC firms as on 30thNov 2012

Analysis The above table shows the sector wise investment of Venture Capital in Karnataka. Banking, financial Services and Insurance sector is the largest beneficiary of Venture Capital with a share of 22.1%. After BFSI, IT and ITES sector, is the second largest recipient with a total share of 20.44 %. Media and Entertainment stood at third place with an investment of 323.05 million US $, making it 9.02 %. Health care and Life Sciences attracted 8.72% of the total share.

Sectors Amount (US $Million) Percentage

IT and ITES 732.48+NA 20.44

Manufacturing 161.12+NA 4.49

Health Care and Life Science 312.59+NA 8.72

Energy 215.97+NA 6.03

Media and Entertainment 323.05+NA 9.02

Food and Beverages 42.11 1.18

Online services 9.67 0.27

Retail 198.85 5.55

Shipping and Logistics 154.77 4.32

Education 89.52+NA 2.49

BFSI 791.62 22.1

Textiles and Garments 95.86 2.68

Engg. and Construction 257.45 7.18

Mobile VS NA NA

Agri. Business 16 0.45

Diversified 14.62 0.41

Telecom 5.6 0.16

Tour and Travel 40 1.12

Hotel and Resorts 3.78 0.11

Other Services 118.37 3.30

Total 3583.43 100


Inference The above diagram states that BFSI sector (Bankinattracted the maximum share of Venture Capital during 1998 to 2012 followed by IT and ITES sector. Media and entertainment, Health Care and Life Sciences were the most preferred sectors after BFSI and IT and ITES.

Stage wise investments as on 30

Stage Early

Growth

Growth-PE

Late

PIPE

Buy-out Buy-out Large

Pre-IPO

others

Total

732.48

161.12

312.59

215.97

323.05

42.11

0

100

200

300

400

500

600

700

800

900

Sector Wise Investments of VC firms


254

The above diagram states that BFSI sector (Banking, Financial Services and Insurance), attracted the maximum share of Venture Capital during 1998 to 2012 followed by IT and ITES sector. Media and entertainment, Health Care and Life Sciences were the most preferred sectors after BFSI and IT and ITES.

Stage wise investments as on 30thNov 2012

Amount(US $ Million) Percentage 166.14 4.64

109.53 3.06

376.26 10.5

1325.21 36.98

509.12 14.21

327.14 9.13 out Large 112.5 3.14

648.18 18.09

9.35 0.26

3583.43 100

42.119.67

198.85

154.77

89.52

791.62

95.86

257.45

0 16 14.62 5.6

Sector Wise Investments of VC firms

Amount (US$ Million)

6502(Print), ISSN 0976 –

g, Financial Services and Insurance), attracted the maximum share of Venture Capital during 1998 to 2012 followed by IT and ITES sector. Media and entertainment, Health Care and Life Sciences were the most

403.78

118.37


Analysis The above table represents the stage wise investment of Venture Capital. Investors showed more interest in investing in Late stage of the company i.e., when an existing company opts for expansion and diversification of their regular product and services. to invest during Pre-IPO stage, as it offers better stability and financial strength of the company.

Inferences Diagram reveals that investors preferred to invest in Late Stage than in the Early Stage. PreIPO stage was the most preferred stage to invest after Late Stage, as it offers higher stability and returns. FINDINGS

1. The Genesis of Venture Capital in Karnataka started in 1998.2. Karnataka shifted their focus from Agriculture to IT and IT enabled services.3. Karnataka is exploring the venture capital market extensively because of human and

social capital. 4. Karnataka, particularly Bangalore city is in the 4

fund in India. 5. KITVEN and Canbank are the first6. Total 21registered venture capital funds are functioning in Karnataka.7. Total 13 venture capital firms are registered under SEBI guidelines and functioning in

Karnataka. 8. Total investments made by VC firms are 3583.43 US $ Million as on Nov 209. Maximum amount of investment was made in 2006, and second largest investments in

2007 and 2008 witnessed the third highest investments by VC firms in Karnataka.10. ICICI heads the race, with a total investment of 1,519.63 million US $, whereas 2i

Capital occupies the 2nd place with an investment of 595.18 million US $. UTI, India Value fund occupies 3rd and 4

166.14109.53

376.26

0

200

400

600

800

1000

1200

1400

Early Growth Growth


255

The above table represents the stage wise investment of Venture Capital. Investors showed more interest in investing in Late stage of the company i.e., when an existing company opts for expansion and diversification of their regular product and services. Later investor prefers

IPO stage, as it offers better stability and financial strength of the

Diagram reveals that investors preferred to invest in Late Stage than in the Early Stage. Prest preferred stage to invest after Late Stage, as it offers higher stability

enesis of Venture Capital in Karnataka started in 1998. Karnataka shifted their focus from Agriculture to IT and IT enabled services.

exploring the venture capital market extensively because of human and

Karnataka, particularly Bangalore city is in the 4th place in attracting venture capital

are the first VC firms were started functioning in Karnataka.Total 21registered venture capital funds are functioning in Karnataka. Total 13 venture capital firms are registered under SEBI guidelines and functioning in

Total investments made by VC firms are 3583.43 US $ Million as on Nov 20Maximum amount of investment was made in 2006, and second largest investments in 2007 and 2008 witnessed the third highest investments by VC firms in Karnataka.ICICI heads the race, with a total investment of 1,519.63 million US $, whereas 2i

place with an investment of 595.18 million US $. UTI, India and 4th place respectively in Karnataka.

376.26

1325.21

509.12

327.14

112.5

648.18

Growth-PE Late PIPE Buy-out Buy-out

Large

Pre-IPO

Stage wise Investments

Amount(US $ Million)

6502(Print), ISSN 0976 –

The above table represents the stage wise investment of Venture Capital. Investors showed more interest in investing in Late stage of the company i.e., when an existing company opts

investor prefers IPO stage, as it offers better stability and financial strength of the

Diagram reveals that investors preferred to invest in Late Stage than in the Early Stage. Pre-st preferred stage to invest after Late Stage, as it offers higher stability

Karnataka shifted their focus from Agriculture to IT and IT enabled services. exploring the venture capital market extensively because of human and

place in attracting venture capital

in Karnataka.

Total 13 venture capital firms are registered under SEBI guidelines and functioning in

Total investments made by VC firms are 3583.43 US $ Million as on Nov 2012. Maximum amount of investment was made in 2006, and second largest investments in 2007 and 2008 witnessed the third highest investments by VC firms in Karnataka. ICICI heads the race, with a total investment of 1,519.63 million US $, whereas 2i

place with an investment of 595.18 million US $. UTI, India

648.18

9.35

IPO others


256

11. Banking, financial Services and Insurance sector (BFSI) is the largest beneficiary of Venture Capital with a share of 22.1%.

12. After BFSI, IT and ITES sector, is the second largest recipient with a total share of 20.44 %.

13. Media and Entertainment stood at third place with an investment of 323.05 million US $, making it 9.02 %. Health care and Life Sciences attracted 8.72% of the total share.

14. Venture Capital Investors showed more interest in investing in Later stage of the company in Karnataka.

SUGGESTIONS

1. Karnataka Government needs to promote capital market segment exclusively to knowledge sector. Since Karnataka has large number of knowledge workers with high per capital income, it is possible to develop such capital market activities in Karnataka.

2. The world is becoming increasingly competitive. The Government of Karnataka should make an attempt to bring the state at par and above the developed state by promoting venture capital financing to new, innovative concepts & ideas, and by liberalizing taxation norms, providing tax incentives to venture firms, giving a Philip to the creation of local pools of capital and holding training sessions for the emerging VC investors.

CONSLUSION

Knowledge industry requires considerable risk capital. Venture capital funds can provide risk capital for knowledge industries. Compare to other states of India like Maharashtra, Gujarat, and Tamil Nadu the growth of venture capital in Karnataka is not up to the mark even though it has enough opportunities. Karnataka is having good number of Knowledgeable Human Resources; it requires risky capital i.e. Venture Capital to come up with knowledge industry. So State Government need motivate venture capitalists to function more and more in Karnataka. At last no doubt, in comparison with others states of India the growth of venture capital market in Karnataka are not so bad but scope for further improvement is plenty. REFERENCE

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13. Vijayalakshmi S (July 2006), Faculty Member, ICFAI, Hyderabad, “Venture Capital Finance: A Global Perspective”, Portfolio Organizer, the ICFAI University Press, pp. 58-65.

14. Dr. N. KANNAN, “Empirical Evidnence On Perception Of Risk About Investments” International Journal of Management (IJM), Volume1, Issue1, 2010, pp. 33 - 42, Published by IAEME

Websites:

1. www.ventureintelligence.com 2. www.ilfsinvestmentmanagers.com 3. [email protected] 4. www.AltAssets.com 5. www.sebi.gov.org 6. www.avca.com

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